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Tom Price and Indirect Costs

Tom Price, Secretary of Health and Human Services, seems to hold a limited understanding of cost accounting and the necessity of indirect costs. I guess he is one of those guys who believes that organizations can exist without administrative costs.

Both the House and the Senate rejected the change this week.

“Tom Price, the secretary of health and human services, said the government

could achieve huge savings next year without harming lifesaving research by paring

back payments to universities for overhead — the “indirect costs” of research

financed by the health institutes.

These include the cost of utilities, internet service, data storage, the construction

and upkeep of laboratories, disposal of hazardous waste and compliance with federal

rules protecting human subjects of clinical research.

“About 30 percent of the grant money that goes out is used for indirect

expenses, which, as you know, means that that money goes for something other than